Investing in binary options can be profitable, but traders should always be aware of binary options scams lurking around. Just like with every other popular product, it doesn’t take a long time for cheats and fakes to show up and try to take advantage of innocent users.
Safe binary options trading isn’t impossible, as there are still many reputable and regulated binary brokers that are offering superb trading service, but traders should also know how to avoid scams in the first place.
Avoiding scams is the best way to protect money from scam binary brokers, and these 5 signs should help everyone distinguish good brokers from bad brokers.
1- Bad Terms and Conditions
Before checking out bonuses and other benefits, traders should read terms and conditions. Many scam brokers have only very short and vague T&C, and some have none at all. Terms and conditions are very important as they explain duties of both sides. Binary options traders should pay special attention to withdrawal rules, and bonus policy as this is where scam binary brokers take advantage of them.
2- Cold Calling and Spam
Cold calling and spam emails are common practices with scam binary brokers. This means that such brokers contact traders even though they never signed up with them. It is completely common that the binary broker the trader selected reaches out to him, but it is not good practice when something like that happens by an unknown broker.
Cold calling and spam usually involve stolen data as well, and traders should never select such brokers but stay away from them. This is very aggressive and unethical way of recruiting new customers.
3- Minimizing the Risk
Bad and scam binary options brokers are prone to downplaying the risk of binary options trading. Sometimes they even claim that there is no risk involved. Of course, that is not true as when it comes to financial markets there is always a certain level of risk.
This is a very popular tactic with scam brokers and they often use it to convince traders how binary options trading can make them rich over course of very short period of time. Good binary brokers will always give reasonable and realistic payouts, and will never deceive traders.
4- Account Management
Many beginners are scared that they will lose their money in binary trading simply because they are beginners as they don’t understand every aspect of financial markets. Good brokers will provide them with demo accounts and educational materials, and scam binary brokers will offer managed accounts. Managed accounts are when someone else, usually account manager employed by the broker trades in the name of the trader and places trades instead of him.
This is very dangerous scam tactic as trader loses control over the deposited amount and has to rely on someone else. Scam brokers and their well-trained managers will make a few profitable trades only to make trader feel safe and get his trust and then they will place a series of unprofitable trades that will leave trader with an empty account.
5- Complicated Withdrawals
Once traders make a profit, they expect to enjoy it so they ask for a withdrawal. This is when things get complicated with scam brokers. They will find a way to lock in the money. Sometimes they simply refuse withdrawal request without explanation or valid reason, or they try to convince trader to invest even more.
Some scam binary brokers won’t even communicate with the trader or will empty the account, block the trader etc. Traders should always check experiences by other traders before they even make a deposit. Also, reading terms and conditions, as stated in the first point, will significantly reduce the danger of even investing with a scam broker in the first place.
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